London-listed Imperial Tobacco shares fell by 63p, or 2.6 percent, to £23.67, and British American Tobacco shares dropped by 79p, or 2.4 percent, to £32.81 after PMI said it planned to enter the e-cigarette market in the second half of next year and would bring forward the launch of another reduced-risk alternative to traditional cigarettes that heats, rather than burns, tobacco.

BAT already offers e-cigarettes, and Imperial plans to launch two battery-powered products next year to tap into a market that generates about $2 billion in global sales.

But analysts at Citigroup said PMI’s plan to spend $100 million to accelerate the rollout of its next generation of products and its intention to increase its marketing investment in traditional cigarettes were likely to present the two British companies with “tougher competition.”

But PMI suffered too. Writing for Bloomberg News on Thursday, Cotten Timberlake said PMI had “extended its decline into a second day, falling the most in five months after a crimped profit outlook prompted Goldman Sachs Group Inc. to cut its rating on the shares to neutral.”

“The stock fell by 3 percent to $86.60 at the close in New York for the steepest drop since June 20.”